Corporate Report Card Roundup

"A survey of a half-dozen exhibition-industry fiscal reports released over the past couple of weeks reveals financial performances that run the gamut from strong profit growth to net income in the red. One constant, however, is that the effect of digital technologies is being felt across the board.

Access Integrated Technologies: The leader in the industry, AccessIT’s revenues continue to surge on the wave of the integrator’s digital cinema installations. With 3,259 systems installed by September 30, AccessIT nearly doubled revenue to $19.5 million in its second quarter of fiscal 2008 from $10 million during the comparable period a year ago. Net losses during the three-month period, however, totaled $9.3 million, or 37 cents per share, compared with $6.1 million, or 26 cents, in the same timeframe the year before.

For the six-month period, revenue increased 142 percent to $37.6 million from $15.5 million in the first half of fiscal 2007. Net losses were $16.1 million, or 64 cents per share, compared with $8.7 million, or 37 cents, in the first half of fiscal 2007.

The company attributed the sharp increases in revenue to virtual print, delivery and software license fees from its Theatre Command Center software as well as contributions from its Advertising and Creatives Services and Bigger Picture divisions.

"The second quarter and most recent weeks have marked an inflection point for AccessIT," said CEO Bud Mayo. "We've successfully completed our Phase One digital cinema deployment plan and are gearing up to provide another 10,000 screens to exhibitors in the coming three years. In addition to the expected ramp of revenues from our recently installed screens in our next two quarters, revenue opportunities in three of our four other divisions are also being realized, and The Bigger Picture is gearing up to provide a consistent flow of content beginning in the last quarter of our fiscal year."

National CineMedia: Still in the black after expenses in its third fiscal quarter was NCM. Revenue for the in-theatre media company with significant investments by AMC, Cinemark and Regal increased 60.8 percent to $97.6 million from $60.7 million during the comparable period the year before. Ad sales marked the majority of revenue with $91.3 million, a 66.3 percent increase from $54.9 million. Net income was $92 million, or 22 cents per share, compared with a net loss of $600,000 during the same timeframe a year before.

"We had another very strong quarter as our management and sales teams made significant progress in a number of key strategic areas," said Chairman and CEO Kurt Hall. "Most notably we increased our advertising inventory utilization by broadening our advertising base and expanding expenditures from existing clients and expanded our digital advertising and Fathom networks. This progress is reflected in our operating results as revenue and margin growth exceeded expectations. I am very optimistic about the growth of our business as we continue to benefit from the shifts in media spending towards highly effective and measurable digital media platforms."

Dolby and DTS: Although best-known in the cinema industry as audio firms, both Dolby and DTS have added digital cinema to their mix of offerings.

For the fourth quarter ended September 28, Dolby posted $129.0 million in revenue, up 26 percent for $102.1 million during the same timeframe the year before. Net income was $44.2 million, or 39 cents per share, compared with $25.2 million, or 22 cents. Year-end revenue was $482.0 million, up 23 percent from $391.5 million, with net income of $142.8 million, or $1.26 per share, compared with $89.5 million, or 80 cents, in 2006.

"I am very pleased with the hard work by the Dolby team in fiscal 2007," said President and CEO Bill Jasper. "We finished the year with increased profitability, a strong position across our core markets and with progress in our new initiatives, such as mobile, digital cinema, and video."

Meanwhile, DTS posted revenue of $10.7 million, up from $9.5 million, for the third quarter ended September 30. Net losses were $1.1 million, or six cents per share, compared with $898,000, or five cents, in the same period the year before.

DTS has been seeking a buyer for its digital cinema and digital imaging divisions.

"With respect to our digital cinema business, in response to the current economic environment and feedback from potential buyers, we have modified our sales approach to offer the assets of the cinema and digital images businesses together or individually," said Jon Kirchner, president and CEO. "We are pleased with the response to our change in approach and we are actively working to complete a sale over the coming months."

Ballantyne of Omaha: Although Ballantyne has experienced some depressed revenue, the company is poised to reap the benefits of digital cinema deployments scheduled for the coming months. Third-quarter revenue for the period ended September 30 was $12.6 million, down 3.5 percent from $13.1 million during the same timeframe a year ago. Net income was $100,000, or 1 cent per share, down from $400,000, or three cents, a year ago.

The results reflect fewer traditional film product sales and distribution. However, digital cinema projector sales increased to $1.1 million from $400,000 during the period.

"As expected, our Q3 results reflect the ongoing impact of the exhibition industry's transition from analog to digital projection technology," said John P. Wilmers, president and CEO. "Our digital equipment business grew over last year but from a small base, helping to somewhat offset the decline we expected in our traditional film projector business. As we progress through the transition to digital, we are actively looking at ways we can streamline costs related to our legacy film products business and improve overall operating performance while still being able to properly serve our customers."

Imax: Finally, even large-format film company Imax anticipated the effects of digital among its third-quarter results. The giant-screen firm posted $29.8 million in revenue, a slight depression from $31.0 million the year before. Systems revenue was $14.9 million, down from $17.6 million; film revenue was $9.5 million, up from $7.7 million; and theatre operations revenue was $4.4 million, slightly down from $4.7 million. Imax experienced a net loss of $7.5 million, or 19 cents per share, compared with $4.6 million, or 14 cents, during the same timeframe in 2006.

During the quarter, Imax signed agreements for 18 large-format systems compared to five during the year-ago period, and Harry Potter and the Order of the Phoenix grossed $39.8 million on 142 giant screens.

In addition to a film slate that includes The Spiderwick Chronicles on February 15, Martin Scorsese’s Rolling Stones documentary Shine a Light on April 4 and The Dark Knight in July, Imax anticipates deploying digital projectors on giant screens in 2008.

"We are excited to be on the threshold of launching our digital projection system late in the second quarter of 2008, ahead of schedule," said Co-Chief Executive Officers Richard L. Gelfond and Bradley J. Wechsler. "Although we have experienced both disappointments and successes over the course of the past decade in bringing Imax digital to the cusp of reality, the company is now poised to benefit from the transition from a film-based system to a digital format. We believe our system will embody the Imax brand and experience and that this transition will have a very positive impact on the company's growth and on our financial performance over the long term."

By Annlee Ellingson, Boxoffice